Continuous investment strategy in preservation technology for inventory management of perishable goods considering exponential demand growth, time-dependent deterioration, and partial backlogging dynamics

Abstract

In this study, we propose a complete mathematical model for perishable products with three simultaneous problems such as exponential demand growth, deteriorating, and time-dependent partial backlogging problem. In addition, our model uses a continuous investment strategy in preservations technology for solving deterioration problems. Three different periods have been considered for inventory system modeling, which include new period, constant deterioration period, and shortage period, in which customer’s patience follows exponential decay function. Complete sensitivity and numerical analysis shows that the demand growth rate coefficient plays the most important role among all parameters and sensitivity of cost to this factor equals to 9.4 percent with only 10 percent increase in demand growth rate coefficient. Finally, our computational evaluation identifies critical boundary conditions, demonstrating that in high-holding-cost environments, high-frequency replenishment mathematically supersedes the economic utility of capital investments in preservation technology.